Break Up the Meatpacker-Retailer Cartel

Break Up the Meatpacker-Retailer Cartel
Posted by Dave on April 2, 2010

By Mike Callicrate

Federal action needed to restore domestic food system

The last thirty years have been tough times for independent livestock producers.

For decades, in addition to the hard work of keeping our farm and ranch operations running each day, we have literally been in a fight for our lives and for the life of our industry. We have lost our markets. Only the illusion of a market remains. When we lose our markets, we lose our farms and ranches, and America loses its food supply.

Ten years ago I downsized and reinvented my cattle operation to sell more directly to consumers, thereby avoiding what I saw as certain death in dealing with the big packers and retailers. My place in the production process came after the cattle left the ranch, at the final step before the packinghouse, where cattle are grown to around 1,250 pounds.

This part of the production chain has become a bottleneck. With only four packers controlling over 85% of the market, few choices exist for selling cattle. Thirty years ago I could have sold to as many as twenty packers as compared to one or maybe two today. It was my responsibility to get the highest price for cattle that I could; instead, I felt complicit in a massive transfer of wealth from failing farmers and ranchers to the highly concentrated and profitable processing and distribution sector.

I, along with many other farmers and ranchers, have fought to free producers from the big meatpacker chains through public and private legal action and legislative efforts, all to no avail.

We have lost over 40% of our cattle producers, 90% of our hog producers, and 80% of our dairy operations in the last thirty years, along with most of our small to medium-sized packers and processors. An economic and social decline has ensued in rural America. Take the example of my home, St. Francis, Kansas, which now has half of the number of kids in its schools compared to 30 years ago.

Producers and consumers both lose in this out-of-control, unregulated marketplace. Consumers are paying record high meat prices while producers, who invest far more in capital, land, and labor than others, now receive the smallest ever share of the food dollar.

This administration has promised to rebuild rural America, our source of good food and wealth. The Justice Department and USDA recently held the first of several workshops in Ankeny, Iowa, showing a renewed interest in antitrust law enforcement, an important first step in restoring a competitive marketplace. However, this is a far bigger task than most people realize. Our processing and distribution infrastructure has been dismantled, and -- once lost -- is extremely difficult and costly to resurrect.

The traditional family farm food system that has fed America both nutritionally and financially has been displaced by an extractive and exploitive industrial system controlled by a handful of corporations. This is the same system capable of rapidly spreading food borne illnesses with the speed of assembly line style processing and the efficiency of national food service distribution. Excessive profits come before good food, healthy people, and our national interests. We are now a net food importer depending on arriving ships and trucks from somewhere else, for something to eat. How secure is a nation unable to feed itself?

An important point that is totally overlooked today is that the biggest retailers and food distributors are squeezing the few big packers and processors left with their big-buyer (monopsony) power. Packers are finding it more profitable to align with retailers, leaving producers the scraps. The number one beef and pork packers, Tyson and Smithfield, have both acknowledged their weakness in dealing with Wal-Mart.

USDA's "Know Your Farmer, Know Your Food" initiative combined with aggressive antitrust enforcement has great potential in laying the foundation for rebuilding broken communities while providing abundant supplies of good local food. The goal of this antitrust effort cannot fall short. Anything less than the total breakup of the meat packer/retailer cartel will leave independent producers and any new processors easy prey, with essentially no chance of success.

Like the Roosevelt "trust-busting" actions of 100 years ago, today's antitrust law enforcement will provide the foundation for a return to free enterprise, bringing new life to both rural and urban communities. The USDA must also redirect government farm support dollars away from industrial agriculture to the support of local and regional food systems. A safe and friendly business environment is essential for both public and private investment in a new food system.

Many diverse family farms producing good food and receiving fair prices from a competitive marketplace is absolutely critical to the health and future of our nation.

Originally published on Huffington Post

Mike Callicrate is an independent cattle producer from St. Francis, Kansas, marketing his beef through his company, Ranch Foods Direct, in Colorado Springs, Colorado